Office of the Attorney General
State of Texas

Re: Calculation of maximum tax attributable to the road and
bridge fund

Dear Mr. Williams:

Chapter 26 of the Tax Code sets forth the method by which each
taxing unit must calculate an "effective tax rate" and the
procedures that each taxing unit must follow in adopting a tax
rate. The "effective tax rate" is the tax rate that will produce
both the revenue necessary to satisfy the taxing unit's debt
payment obligations for the year in which the rate is calculated
and the same amount of operating revenue levied on properties
taxed in the previous year and taxable in the current year. See
Attorney General Opinion MW-495 (1982). We understand you to ask
three questions about the calculation of the effective tax rate
for a county. We will answer each of your questions in turn.

Generally, the total county tax rate will result from the tax
rates set for three different property taxes. [FN1] Article
VIII, sections 1-a and 9 of the Texas Constitution impose a
ceiling on each individual rate and provide that the total rate
cannot exceed $1.25/$100 valuation. The three individual taxes
are: (1) the fund for farm-to-market road/flood control (lateral
road fund), with a rate ceiling of $.30/$100 valuation (section
1-a); (2) the general fund, the permanent improvement fund, the
road and bridge fund, and the jury fund, with a rate ceiling of
$.80/$100 valuation (section 9); and (3) the fund for the
further maintenance of public roads, with a rate ceiling of
$.15/$100 valuation (section 9). We understand you to ask first
whether the tax rate rollback election provisions set forth in
section 26.07 of the Tax Code may be invoked when the increase in
either the general fund, the permanent improvement fund, the road
and bridge fund, and the jury fund component of the tax rate
exceeds the effective tax rate for that fund by eight percent or
more or whether the tax rate rollback election provisions can be
invoked only when the total county tax rate exceeds the total
county effective tax rate by eight percent or more. For two
reasons, we conclude that section 26.07 of the Tax Code may be
invoked only when the total county tax rate exceeds the total
county effective tax rate by eight percent or more.

First, courts generally will confer great weight to an agency's
interpretation of a statute, unless it is obviously contrary to
the statute's clear and unambiguous meaning. Teacher Retirement
System v. Duckworth, 260 S.W.2d 632, 636 (Tex.Civ.App.--Fort
Worth 1953), aff'd, 264 S.W.2d 98 (Tex.1954); Pacific Employers
Insurance Co. v. Brannon, 242 S.W.2d 185, 189 (Tex.1951); Dallas
Title and Guaranty Co. v. Board of Insurance Commissioners, 224
S.W.2d 332, 336 (Tex.Civ.App.--Austin 1949, writ ref'd). The
contemporaneous construction of a statute by those charged with
the responsibility of its administration will be respected,
especially when the construction has been sanctioned by long
acquiescence. Stanford v. Butler, 181 S.W.2d 269, 273
(Tex.1944). The State Property Tax Board has always construed
sections 26.05 and 26.07 of the Tax Code to require that each
component of the tax rate be calculated as an independent rate
and then added together for a total rate.

Second, the clear terms of the Tax Code provisions require that
the eight percent tax rate increase triggering the tax rate
rollback election apply to the county's effective rate, not to
the effective rate of each component of a county's rate. Section
26.04(d) of the Tax Code provides in pertinent part:

The designated officer or employee shall calculate the tax
rate that if applied to the total taxable value submitted to the
governing body less the taxable value of new property would
impose the amount of property taxes determined as provided by
Subsection (c) of this section [which essentially determines the
amount of operating revenue levied on properties taxed in the
previous year and taxable in the current year].... (Emphasis
added).

See also Tax Code s 26.042 (governing calculation of effective
tax rate in a county imposing a sales and use tax).

Section 26.05 of the Tax Code provides the following in
pertinent part:

(a) By September 1 or as soon thereafter as practicable, the
governing body of each taxing unit shall adopt a tax rate for the
current tax year and shall notify the assessor for the unit of
the rate adopted. The tax rate consists of two components, each
of which must be approved separately. The components are:

(1) the rate that, if applied to the total taxable value,
will impose the amount of taxes needed to pay the unit's debt
service as described by Section 26.04(e)(3) of this code; and

(2) the rate that, if applied to the total taxable value,
will impose the amount of taxes needed to fund maintenance and
operation expenditures of the unit for the next year.

(b) a taxing unit may not impose property taxes in any year
until the governing body has adopted a tax rate for that year,
and the annual tax rate must be set by ordinance, resolution or
order, depending on the method prescribed by law for adoption of
a law by the governing body....

(c) The governing body may not adopt a tax rate that exceeds
the tax rate calculated as provided by Section 26.04 of this code
by more than three percent until it has held a public hearing on
the proposed increase and has otherwise complied with Section
26.06 of this code. The governing body of a taxing unit shall
reduce a tax rate set by law or by vote of the electorate to the
rate calculated as provided by Section 26.04 of this code and may
not adopt a higher rate unless it first complies with Section
26.06 of this code. (Emphasis added).

And finally, section 26.07 of the Tax Code sets forth the
procedures that must be followed in order to conduct a tax rate
rollback election to repeal the rate increase. The section
provides in pertinent part:

(a) If the governing body of a taxing unit other than a
school district adopts a tax rate that exceeds the rate
calculated as provided by Section 26.04 of this code by more than
eight percent, the qualified voters of the taxing unit by
petition may require that an election be held to determine
whether or not to reduce the tax rate adopted for the current
year to a rate that exceeds the rate calculated as provided by
Section 26.04 of this code by only eight percent. (Emphasis
added).

A reading of chapter 26, as a whole, indicates that the tax
rate rollback election provisions of section 26.07 may be invoked
only in an instance in which the total tax rate adopted exceeds
the total effective tax rate by eight percent or more. If the
legislature had intended that a county's component rates
individually be limited to the three percent-eight percent rate
increase limitations, it could easily have so provided. But it
did not. Because we are required to give effect to the evident
intent of the legislature, Bernard Hanyard Enterprises, Inc. v.
McBeath, 663 S.W.2d 639, 643 (Tex.App.--Austin 1983, writ ref'd
n.r.e.); Chemical Bank v. Commercial Industries Service Co., 662
S.W.2d 802, 804 (Tex.App.--Houston [14th Dist.] 1983), writ ref'd
n.r.e., 668 S.W.2d 336 (Tex.1984), we are compelled to conclude
that the tax rate rollback election provisions set forth in
section 26.07 may be invoked only when the total tax rate adopted
pursuant to section 26.05 of the code exceeds the total effective
tax rate as calculated by section 26.04 by eight percent or more.

We understand your next question to be whether the construction
that we have adopted in answer to your first question permits, in
effect, the "transfer" to another fund of tax money that must be
used only for purposes authorized by the qualified voters of the
county in the first election permitting the imposition of the
tax. Our answer is that it does not. Your concern apparently
arises from the language contained in the relevant constitutional
provisions authorizing the imposition of the taxes at issue.

Article VIII, section 1-a, of the Texas Constitution provides
the following in pertinent part:

Sec. 1-a. From and after January 1, 1951, no State ad valorem
tax shall be levied upon any property within this State for
general revenue purposes. From and after January 1, 1951, the
several counties of the State are authorized to levy ad valorem
taxes upon all property within their respective boundaries for
county purposes, except the first Three Thousand Dollars ($3,000)
value of residential homesteads of married or unmarried adults,
male or female, including those living alone, not to exceed
thirty cents (30 cents) on each One Hundred Dollars ($100)
valuation, in addition to all other ad valorem taxes authorized
by the Constitution of this State, provided the revenue derived
therefrom shall be used for construction and maintenance of Farm
to Market Roads or for Flood Control, except as herein otherwise
provided. (Emphasis added).

Sec. 9. The State tax on property, exclusive of the tax
necessary to pay the public debt, and of the taxes provided for
the benefit of the public free schools, shall never exceed
Thirty-five Cents (35 cents) on the One Hundred Dollars ($100)
valuation; and no county, city or town shall levy a tax rate in
excess of Eighty Cents (80 cents) on the One Hundred Dollars
($100) valuation in any one (1) year for general fund, permanent
improvement fund, road and bridge fund and jury fund purposes;
provided further that at the time the Commissioners Court meets
to levy the annual tax rate for each county it shall levy
whatever tax rate may be needed for the four (4) constitutional
purposes; namely, general fund, permanent improvement fund, road
and bridge fund and jury fund so long as the Court does not
impair any outstanding bonds or other obligations and so long as
the total of the foregoing tax levies does not exceed Eighty
Cents (80 cents) on the One Hundred Dollars ($100) valuation in
any one (1) year. Once the Court has levied the annual tax rate,
the same shall remain in force and effect during that taxable
year; and the Legislature may also authorize an additional
annual ad valorem tax to be levied and collected for the further
maintenance of the public roads; provided, that a majority of
the qualified property taxpaying voters of the county voting at
an election to be held for that purpose shall vote such tax, not
to exceed Fifteen Cents (15 cents) on the One Hundred Dollars
($100) valuation of the property subject to taxation in such
county. Any county may put all tax money collected by the county
into one general fund, without regard to the purpose or source of
each tax. And the Legislature may pass local laws for the
maintenance of the public roads and highways, without the local
notice required for special or local laws. This Section shall not
be construed as a limitation of powers delegated to counties,
cities or towns by any other Section or Sections of this
Constitution. (Emphasis added).

The underscored sentence of article VIII, section 9, was added
by a constitutional amendment in 1967. Acts 1967, 60th Leg.,
H.J.R. No. 3, at 2979. Prior to the 1967 amendment it was well
established that the general fund, permanent improvement fund,
road and bridge fund, and jury fund, the four so-called
"constitutional funds" of article VIII, section 9, could not be
commingled or used for purposes other than that for which each
was levied. See First State Bank and Trust Company of Rio Grande
City v. Starr County, 306 S.W.2d 246 (Tex.Civ.App.--San Antonio
1957, no writ); Carroll v. Williams, 202 S.W.2d 504 (Tex.1918);
Attorney General Opinion Nos. O-6948 (1945); O-5422 (1943); O-4763 (1942). After the adoption of the 1967 amendment, the
courts and this office consistently construed the amendment to
permit commingling or consolidation of the article VIII, section
9, funds, Lewis v. Nacogdoches County, 461 S.W.2d 514
(Tex.Civ.App.--Tyler 1970, no writ); Attorney General Opinion
Nos. H-530 (1975); H-194 (1974); M-1250, M-1195 (1972); M-892
(1971); M-369 (1969); M-207 (1968), but not to permit the
commingling or consolidation of any of the article VIII, section
9, funds with the article VIII, section 1-a fund. Attorney
General Opinion Nos. H-530 (1975); M-1250 (1972).

The matter of commingling funds is entirely separate from the
matter of determining the effective tax rate. As indicated, the
county may raise the effective tax rate by eight percent without
triggering the rollback election provisions. There is no
requirement, however, that any tax increase be apportioned among
the funds for which taxes are raised. All or none of the
increase may go to the lateral road fund. Once the taxes are
assessed and collected for the lateral road fund, however, that
money may not be commingled with the other funds.

Your final question is about the effect of the adoption of
article VIII, section 21, of the Texas Constitution on the tax
rate ceilings set forth in article VIII, section 1-a and 9.
Article VIII, section 21 provides the following:

Sec. 21. (a) Subject to any exceptions prescribed by general
law, the total amount of property taxes imposed by a political
subdivision in any year may not exceed the total amount of
property taxes imposed by that subdivision in the preceding year
unless the governing body of the subdivision gives notice of its
intent to consider an increase in taxes and holds a public
hearing on the proposed increase before it increases those total
taxes. The legislature shall prescribe by law the form, content,
timing, and methods of giving the notice and the rules for the
conduct of the hearing.

(b) In calculating the total amount of taxes imposed in the
current year for the purposes of Subsection (a) of this section,
the taxes on property in territory added to the political
subdivision since the preceding year and on new improvements that
were not taxable in the preceding year are excluded. In
calculating the total amount of taxes imposed in the preceding
year for the purposes of Subsection (a) of this section, the
taxes imposed on real property that is not taxable by the
subdivision in the current year are excluded.

(c) The legislature by general law shall require that,
subject to reasonable exceptions, a property owner be given
notice of a revaluation of his property and a reasonable estimate
of the amount of taxes that would be imposed on his property if
the total amount of property taxes for the subdivision were not
increased according to any law enacted pursuant to Subsection (a)
of this section. The notice must be given before the procedures
required in Subsection (a) are instituted. (Emphasis added).

The "general law" required by article VIII, section 21 (or
rather the "exceptions" to the specific formula calculations set
forth therein) is the effective tax rate calculation detailed in
section 26.04 of the Tax Code. See Attorney General Opinion MW-495 (1982). Your concern apparently arises from the recent
decline in the value of real property in Texas. When article
VIII, section 21, of the Texas Constitution and its companion
statute, now-repealed article 7244c, V.T.C.S. (the predecessor
statute to section 26.04 of the Tax Code), were enacted in 1978,
real property valuations in Texas were rising. As a result, the
effective tax rates generally dropped from year to year. A
simple example will illustrate (for purposes of brevity, we will
discuss only the maintenance and operation component of the tax
rate). If in 1978 a taxing unit's tax rate was $1.50/$100
valuation, with the taxable property on the tax roll having an
appraised value of $10 million, the same taxing unit's effective
tax in 1979, after a reappraisal that increased the appraised
value of taxable property on the tax roll to $20 million, would
be $.75/$100, i.e. the rate that, when applied to the property
taxed last year and taxed this year at this year's appraised
value, will produce the same amount of operating revenue produced
last year. Obviously, when the appraised value of real property
drops from one year to the next, the effective tax rate will
necessarily rise. In those counties that suffer significant
reductions in appraised value of property on their tax roll, it
is conceivable that the effective tax rates of the various
components of the county's total tax rate may exceed the
constitutionally imposed tax rate ceilings. We understand you to
ask whether article VIII, section 21, acts to supercede or
impliedly repeal the tax rate ceilings set forth in article VIII,
sections 1-a and 9. The answer is "no."

Article VIII, section 21, of the Texas Constitution is a notice
provision; neither it nor its statutory counterpart prescribes
any maximum tax rates. Together, they only require public notice
if any tax rate adopted exceeds a certain calculated tax rate
(the effective tax rate) by a specified percent and permit a tax
rate rollback election in the event that the adopted rate exceeds
the calculated rate by a larger specified percent. The Texas
Supreme Court has enunciated the rule that

[t]he Constitution must be read as a whole, and all
amendments thereto must be considered as if every part had been
adopted at the same time and as one instrument, and effect must
be given to each part of each clause, explained and qualified by
every other part. [Citation omitted]. Different sections,
amendments, or provisions of a Constitution which relate to the
same subject matter should be construed together and considered
in the light of each other. [Citations omitted].

Purcell v. Lindsey, 314 S.W.2d 283, 284 (Tex.1958); see also
State v. Clements, 319 S.W.2d 450 (Tex.Civ.App.--Texarkana 1958,
writ ref'd). We do not perceive any conflict between the two
constitutional provisions. Article VIII, section 21, requires
that each taxing unit must calculate an effective tax rate and,
if the tax rate that the taxing unit finally adopts exceeds a
specified percent, must comply with certain public notice and
public meeting requirements. The other two constitutional
provisions, article VIII, sections 1-a and 9, authorize the
imposition of certain property taxes for certain purposes and
impose a tax rate ceiling on each in the event that those taxes
are imposed. In this instance, we must construe article VIII,
sections 1-a, 9, and 21, of the Texas Constitution together; the
tax rate ceilings imposed by article VIII that are applicable to
the tax rates that are actually adopted remain in effect.

SUMMARY

The tax rate rollback election procedures set forth in
section 26.07 of the Tax Code may be invoked in a county only
when the total tax rate adopted by a county exceeds the total
effective tax rate by a specified percent; it may not be invoked
when the adopted tax rate of a component of the county's total
tax rate exceeds that component's effective tax rate by a
specified percent. When the adopted tax rate of a component of
the county's total tax rate exceeds that component's effective
tax rate, no impermissible "transfer" of tax money occurs.
Article VIII, sections 1-a, 9, and 21 of the Texas Constitution
should be construed together. In an instance in which the
effective tax rate calculated pursuant to article VIII, section
21, of the Texas Constitution and section 26.04 of the Tax Code
exceeds the tax rate ceilings set forth in article VIII, sections
1-a and 9, the tax rate ceilings imposed by article VIII that are
applicable to the tax rates that are actually adopted, are still
in effect.

Very truly yours,

Jim Mattox
Attorney General of Texas

Jack Hightower
First Assistant Attorney General

Mary Keller
Executive Assistant Attorney General

Judge Zollie Steakley
Special Assistant Attorney General

Rick Gilpin
Chairman
Opinion Committee

Prepared by
Jim Moellinger
Assistant Attorney General

Footnotes

FN1 We note that other statutory and constitutional provisions
permit counties to levy additional property taxes in certain
instances, e.g., for jails, courthouses, sea wall construction,
fire fighting, and other special purposes. For convenience, we
are limiting our answer to the first question to the three most
widely imposed constitutional taxes. If a county levies any of
these additional property taxes, the assessor calculates an
effective tax rate for each additional tax under the reasoning we
adopt herein and adds it to the county's total effective rate.